PLC () boss Tim Martin has told European Commission president Jean-Claude Juncker to take a “wise-up pill” if he wants to avoid further economic damage to some struggling countries on the continent.
Martin – dubbed the ‘giant of the British pub industry’ given his height – also used his pub chain’s final results to tell EU negotiators that Europe would be in more trouble than the UK if the Brexit divorce is an ugly one.
“It is my view that the main risk from the current Brexit negotiations is not to Wetherspoon, but to our excellent EU suppliers – and to EU economies,” said Martin.
“Juncker, Barnier, Selmayr, Verhofstadt and others need to take a wise-up pill in order to avoid causing further economic damage to struggling economies like Greece, Portugal, Spain and Italy – where youth unemployment, in particular, is at epidemic levels.”
He added that ‘Spoons – which he founded back in the late 1970s – would switch away from EU suppliers if the “unelected oligarchs” continue to use Brexit to “punish the UK”.
“As a result of their current posturing and threats, EU negotiators are inevitably encouraging importers like Wetherspoon to look elsewhere for supplies.
“This process is unlikely to have adverse effects on the UK economy, as companies will be able to switch to suppliers representing the 93% of the world’s population which is not in the EU, but this evolution will eventually be highly damaging to the economy of the EU.”
No surprises in full-year results
As for Wetherspoon’s results, they were in-line with what the company had forecast earlier in the summer when it lifted expectations not once but twice.
Like-for-like sales in the 12 months ended 30 July increased by 4% which was at the top end of guidance. Total revenues came in at £1.66bn (2016: £1.60bn), with rising food sales a key driver.
Margins also increased throughout the year to 7.7% (2016: 6.9%), which helped pre-tax profits break through the £100mln barrier to £102.8mln – a 25% or so increase on the £80.6mln posted last year.
The strong performance came despite post-Brexit concerns that higher food and drink prices and stagnant wage growth could weigh on the pub industry. Wetherspoon has kept its final dividend at 8p per share.
Strong start to new fiscal year
The FTSE 250 firm has been saying for a few months that it needs to generate like-for-like sales growth of around 3-4% in the current financial year if it wants to maintain those profits given the expected rise in costs over the next 12 months.
Martin told investors that Spoons has got off to an “encouraging” start in the opening six weeks of the new year, with like-for-likes increasing by 6.1%.
“This is a positive start, but is for a few weeks only – and is very unlikely to continue for the rest of the year,” he added.
“Comparisons will become more stretching – and sales, which were very strong in the summer holidays, are likely to return to more modest levels.
“We currently anticipate a trading outcome for the current financial year in line with our expectations.”
‘3-4% growth target shouldn’t be a problem’
“The news that J D Wetherspoon has served up stronger than expected results, plus an even stronger start to the current year, will certainly have put investors in high spirits, especially since it comes just days after a disappointing update from rival .,” said analyst George Salmon.
“Another plus is the improvement in operating margins, which have been trending down over recent years.
“The group does warn that the excellent start to this year is unlikely to be maintained, and in light of cost headwinds and continued closures, it will need like like-for-like sales to grow by 3-4% to repeat last year’s profit.
“However, given the momentum it is currently enjoying, there’s no reason to think this should be a problem.”
Shares gained 8.9% to £11.37 in early deals.
–Updates for share price and analyst comment–